NY Case Shows Insurance Possibility For SEC Disgorgements

By Stephen Weisbrod and Tamra Ferguson (December 16, 2021, 5:33 PM EST) -- Directors and officers, or D&O, insurers almost invariably deny coverage for payments made pursuant to settlement agreements with the U.S. Securities and Exchange Commission when the settlements describe the payments as disgorgements.

But as shown in New York's highest court's recent decision in J.P. Morgan Securities Inc. v. Vigilant Insurance Co., or J.P. Morgan II,[1] coverage for disgorgements may be available in some cases. In J.P. Morgan II, the New York Court of Appeals reversed the Appellate Division, First Department's grant of summary judgment in favor of insurers.

The New York Court of Appeals held that insurers could be required to cover...

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